These crooks have been very quiet ever since Regis Possino got popped.
Foreign investors see red over 3-D firm with local ties By Chris Carey
Of the Post-Dispatch
06/14/2004
Chequemate International Inc. hailed its 3-D television technology as the
biggest revolution in home entertainment since the videocassette recorder.
Offshore brokerage firms pushing its stock told of looming deals with major
players in the electronics and broadcasting industries.
Those pitches persuaded foreigners to snap up shares of the company, which
got its start in Salt Lake City and later called St. Charles home.
But after burning through all its cash and running up losses of more than
$40 million, Chequemate has vanished, along with the overseas brokerages
that promoted its shares.
The stock, which peaked at $18.44 in February 2000, today trades for a 10th
of a cent.
Chequemate might appear to be! just another casualty of Wall Street's
technology bust, which brought down many high-flying stocks.
But an investigation by the St. Louis Post-Dispatch shows that it was part
of a worldwide ring that profited handsomely by selling questionable U.S.
stocks overseas.
Chequemate was one of seven publicly traded U.S. companies with common
ties. Today, four are defunct, two are bankrupt and one was bought out at
less than $1 a share.
The main link was an American, Bryant D. Cragun, a former stockbroker
turned financier.
Securities and Exchange Commission filings, incorporation papers and other
documents show that Cragun figured prominently in the creation or evolution
of the companies, as an officer, director or financier.
The property settlement from his divorce in Arizona in 2001 also shows that
he had an ownership interest in two of the unlicensed, offshore brokerages
that promoted the companies' shares.
While most people who bought and held their shares in Chequemate and the
other companies lost nearly everything they invested, Cragun became rich.
Another divorce document estimated the value of the assets he and his wife
were dividing to be "in the middle eight figures," or roughly $50 million.
Cragun has acknowledged in court filings that the SEC has investigated the
overseas stock sales. But the agency has not taken action.
The Post-Dispatch's investigation turned up additional information about
Cragun's business dealings. For example:
The property settlement links Cragun to ownership of Oxford International
Management, based in the Philippines, and PT Dolok , which was incorporated
in Indonesia and did business under the name International Asset
Management. He previously denied, in court cases brought by investors, that
he had a stake in either operation.
Two partners in a Salt Lake City accounting firm that audited Chequemate's
financial statements were barred by the S! EC from auditing public companies
in 2001 because of their role in a separate stock manipulation case. One of
them, R. Gordon Jones, is listed as an officer with Cragun in a company
that owned part of Oxford.
A stock research firm in California, whose glowing report triggered a sharp
rise in Chequemate's share price, was incorporated by disbarred lawyer
Regis M. Possino, who has convictions for drug dealing and fraud. He had
big stakes in several other companies that Oxford promoted. The SEC has
since charged in a lawsuit that stock research firm, Access 1 Financial,
and its president issued a false and misleading report on another
company's stock as part of a "pump-and-dump" scheme.
Another firm that Chequemate hired to promote its shares was controlled by
Allen Z. Wolfson, a white-collar criminal who has since returned to prison
on separate stock fraud and manipulation charges.
Chequemate provides a glimpse into the world of so- called penny stocks,
where failures vastly outnumber successes.
The shares that foreign investors bought were routed offshore under an
obscure provision in the U.S. securities code that lets companies sell
stock privately to certain types of non-U.S. buyers. Under Regulation S,
companies can avoid the time and expense of a registered stock offering by
placing shares with "accredited investors," such as hedge funds and wealthy
individuals.
One caveat: Such stock cannot be resold in the United States for one year.
Because of the risk, the companies often discount the shares to overseas
buyers.
But in the boiler room schemes, the stock immediately is resold to foreign
investors at big markups.
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Reporter Christopher Carey
E-mail: ccarey@post-dispatch.com
Phone: 314-340-8291
